The history of mutual funds dates back to the 18th century in Netherlands (Europe), when a Dutch merchant and broker named Adriaan Van Ketwich formed the world’s first mutual fund. The fund was called Eendragt Maakt Magt which translates to “unity creates strength”.

The idea behind the formation of mutual fund is to collect the capital from different investors and invest their capital in bonds of different countries mainly European, American countries. The investment in these countries is backed by income from plantation which can be called an early version of today’s securities based on mortgages. The fund appealed most to the small investors with minimum capital.

With the start of the 19th century, the idea of the funds spread across all the Europe and then making its way to the United States. The first modern day mutual fund was introduced in the year 1924 with the creation of Massachusetts Investors Trust in Boston, United States. The point of difference of this fund from earlier ones is that mutual funds must buy back their shares from their investors at the end of every business day i.e. it allows continuous issue of shares and their redemption. For the first time, investors can pool their capital in the investment basket managed by professionals and hence can reduce the risk of pooling whole capital in individual stocks.

In India, the mutual fund investments started with the formation of Unit Trust of India (UTI) in 1963. The main objective of this initiative of Reserve Bank of India and Indian Government is to attract retail investors. After this successful launch, several public sector banks launched their mutual funds. SBI Mutual fund was the first non UTI mutual fund established in 1987.

With more than 15000 mutual funds available to investors today, it’s a positive sign that mutual fund industry is growing rapidly. In 2016, SEBI has submitted its recommendation on allowing e commerce enterprises to offer mutual funds on their platform. This can be considered the next revolutionary step in this industry i.e. the sale of mutual funds through online marketplaces.

Mutual funds started with the idea of capital pooling for investment purpose. Their origin dates back to 18th century. In India, mutual funds were introduced in 1963 with the launch of Unit Trust of India. UTI enjoyed a monopoly in the Indian mutual fund market until 1987, when a host of other government-controlled financial companies established their own funds, including SBI and PNB. In 1993 private players were allowed in the market, as a result of the historic constitutional amendments brought forward by the then Congress-led government under the existing regime of Liberalization, Privatization and Globalization. Small investors started investing in mutual funds with the enactment of Investment Company Act in 1940. In 1996, SEBI formulated the regulatory framework - Mutual Fund regulation.

AMFI (Association of Mutual Funds in India), a non-profit organization, was established in 1995 with the objective to promote healthy and ethical marketing practices in mutual fund transactions. UTI Mutual Fund was formed from UTI as a SEBI registered mutual fund in 2003. Mutual fund investments are sourced both from companies and individuals.

Gradually since 2013, institutional investors moved to investing directly with the mutual funds to save on the expense ratio. Individual investors are however served mostly by investment advisors and banks. Since 2009, online platforms for investing in mutual funds have also evolved. Since then mutual funds have continued to evolve and considered as major platform for investment by retail investors as well as institutional investors.

The history of mutual funds dates back to the 18th century in Netherlands (Europe), when a Dutch merchant and broker named Adriaan Van Ketwich formed the world’s first mutual fund. The fund was called Eendragt Maakt Magt which translates to “unity creates strength”.

The idea behind the formation of mutual fund is to collect the capital from different investors and invest their capital in bonds of different countries mainly European, American countries. The investment in these countries is backed by income from plantation which can be called an early version of today’s securities based on mortgages. The fund appealed most to the small investors with minimum capital.

With the start of the 19th century, the idea of the funds spread across all the Europe and then making its way to the United States. The first modern day mutual fund was introduced in the year 1924 with the creation of Massachusetts Investors Trust in Boston, United States. The point of difference of this fund from earlier ones is that mutual funds must buy back their shares from their investors at the end of every business day i.e. it allows continuous issue of shares and their redemption. For the first time, investors can pool their capital in the investment basket managed by professionals and hence can reduce the risk of pooling whole capital in individual stocks.

In India, the mutual fund investments started with the formation of Unit Trust of India (UTI) in 1963. The main objective of this initiative of Reserve Bank of India and Indian Government is to attract retail investors. After this successful launch, several public sector banks launched their mutual funds. SBI Mutual fund was the first non UTI mutual fund established in 1987.

With more than 15000 mutual funds available to investors today, it’s a positive sign that mutual fund industry is growing rapidly. In 2016, SEBI has submitted its recommendation on allowing e commerce enterprises to offer mutual funds on their platform. This can be considered the next revolutionary step in this industry i.e. the sale of mutual funds through online marketplaces.

Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.

Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.